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Trucking Business Conditions Fall Slightly in U.S.

Posted: November 12, 2015

BLOOMINGTON, IN – The latest measure of business conditions in the U.S. trucking industry has retreated slightly following an uneven performance this year and is expected to decline further at the year’s end.

The transportation forecasting and analysis firm FTR says its Trucking Conditions Index (TCI) for September declined to 8.46 from the previous month as the trucking environment remains in a fragile equilibrium between decent freight growth and lower, but still high, capacity utilization. It reports price growth in 2015 has been very modest, but a more positive TCI in 2016 will reflect expected rate increases later in the year

Inventory destocking, sluggish trade, and weak manufacturing have created an environment much different than last year for truckers and transportation professionals, according to Jonathan Starks, director of transportation analysis at FTR.

“While overall capacity is relatively tight, there is a dichotomy between what is seen in the contract potion versus the spot market. As supply has increased relative to demand, loads have moved back to the contract and dedicated markets that ran out of excess capacity in 2014 due to regulations and weather,” he says.

The spot market, on the other hand, Starks says, is showing definite weakness, with load activity weak, truck supply up significantly, and rates down from prior year.

“Contract rates continue to rise, although they have started to show some slowing. The market is relatively stable, with the major risk coming from a potential slowdown in freight demand due to the items mentioned earlier,” he says. “If slow growth in the economy continues, the next significant change in market conditions isn’t expected until fleets start implementing the coming regulations. That is likely to occur in the second half of 2016.”

 

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